--- Forwarded Message from "Jill Cheng" <[log in to unmask]> --- >Reply-To: <[log in to unmask]> >From: "Jill Cheng" <[log in to unmask]> >To: <[log in to unmask]> >Cc: <[log in to unmask]>, <[log in to unmask]>, <[log in to unmask]>, <[log in to unmask]>, <[log in to unmask]>, <[log in to unmask]> >Subject: Cheng & Tsui Pricing >Date: Wed, 20 Sep 2000 14:36:37 -0400 >Importance: Normal Dear Ms. Shoaf: Professor Yao, one of the primary authors of the Integrated Chinese series, was kind enough to forward your e mails regarding our audiotape pricing, as he knows very well that we take customer feedback very seriously. I appreciate the difficulty you have with our charging for audio-visual aids for our language materials, as we know that many major publishers offer them for free. We have long struggled with this issue, speaking with many language lab directors and attending the New England LLTI conference, trying to come up with some equitable solutions to our dilemma. The pricing we have developed is based on such consultations and research, not based on whim, although it continues to be a work in progress. When we first started many years ago in dealing with audio-visual aids of overseas products we distributed, all of the materials had to be purchased at rather high prices--especially those coming from Japan. We were told by the mostly Asian publishers that they offer no duplication privileges or discounts for volume purchases. If a school wanted to put the tapes on ten workstations, it needed to purchase ten units; if a school had 100 students with no language lab, it had to buy the 100 sets to give away or have the students pay for them, as no duplicating was allowed. Again, no discount or lab packs were offered. Digitization or web server permissions were out of the question. Later, when we started publishing original audio-visual products, we wanted to be more generous than our foreign counterparts, as we have always sought to strike a balance between our customers' needs and our own requirements to be a financially healthy company that can continue our mission of "bringing Asia to the world." So we looked into what other American publishers did in this area. First, we learned that major publishers of Spanish and French language textbooks often gave these materials to language labs for free if the books were adopted by the schools. The sales volume of those languages are huge and in a different league from ours. Second, we learned that the reason they could give them away without charge was that they charged much higher prices for the textbooks to cover all the free giveaways. Third, we learned that no publisher in our specialized category of Asian or less-commonly-taught language materials ever gave audiovisual products for free. Nearly all, in fact, followed exactly the same rules as our foreign publisher counterparts--no discounts or site licenses even for large class adoptions. Many charged higher unit prices than we do as well. On the basis of all this research, we had two clear paths from which to pick: One, we could raise our textbook prices significantly higher to cover all the free giveaways, and at the same time make a lot more money for us and our authors since sales of audio-visual aids are usually so small that they are money losers anyway. Or, two, we could follow the majority of small, specialized publishers and give no discounts, site licenses, digitization or web server permissions at all and save us the heavy adminstrative burden of issuing permissions and make more money from full-price sales of all these auxiliary products. Perhaps foolishly, however, we chose a third and middle way: We chose, first, to help the students by keeping our textbooks reasonably priced relative to our costs; it also meant that we had a much lower profit margin. Second, we chose to be more accomodating and supportive of the schools and developed a sliding-scale model that offered significant savings to language labs rather than to charge them full price for each unit purchased. These formulas were derived many years ago after consultation with labs of different sizes and needs and have generally been accepted by them. My staff is quite unhappy about the extra work this entails but supported the rationale behind it all--to be responsive to our customers' needs as best we can. Exactly two years ago, I was invited by the New England Language Learning and Technology International to represent the small publishers at a regional conference on permissions for digitizing audio-video materials by publishers. (I was invited subsequently to speak at the international conference but had to cancel at the last minute because of my mother's illness.) Most publishers, large and small, were unwilling to allow digitization at that time, as there were many concerns about copyright and copying. The subject of lab directors' frustration with all the different policies publishers had with tape duplication, site licensing, digitization, etc. also came up. This was in recognition of the fact that there is no universal policy of free audio-visual materials from publishers or permission to digitize. After I stood up to explain the small-market publishers' predicament--that we simply do not have the sales volume to allow such generous giveaways, nor do we wish to impose higher costs on students if we were to institute such free giveaway programs by raising textbook prices--many in the audience came up to me during our break to express their new-found understanding and support of our situation and philosophy. More to your point, however, after receiving your e mail, I updated my knowledge of the current status of pricing of audio-visual materials and textbooks by other small commercial publishers and other larger not-for-profit university presses in the U.S. I thought it would interest you to have a sampling of my survey, without my revealing the actual names of the parties involved: 1) A major university press publishes a series of beginning and intermediate texts. In comparing an intermediate text with our Chinese Breakthrough, a comparable-level book, we find: University Press Title Cheng & Tsui Title Intermediate Chinese textbook Chinese Breakthrough 392 pages at $39.50 450 pages at $29.95 Macintosh CD-ROM at $42.50 (indiv) Macintosh CD-ROM at $49.95 (indiv) 30 users of CD-ROM at $1275.00 (no server) Up to 30 users on server at $174.83 90 users of CD-ROM at $3825.00 (no server) Up to 90 users on server at $274.73 Audio tapes not available, as not willing to do it Audio tapes available with privileges Small Commercial Press Title Cheng & Tsui Title Beginning Japanese textbook (top seller) Integrated Chinese Level 1/1 Textbook audiotapes (120 minutes) at $40.00 audiotapes ( 175 minutes) at $39.95 No digitizing/web allowed Digitizing/web permissions available No discounts, no duplicating Heavily discounted license for duplication These examples are typical of what I have learned. In both cases, our prices offer more value, and we offer greatly discounted pricing with flexibility for duplication and digitizing in multi-user environments. Educational publishers have known that audio-visual and multimedia materials are money-losing products. In the case of the small commercial press above, the publication of their entire series was funded by a major foundation; yet their prices are higher than ours and policies inflexible. As for the not-for-profit university press above, they refused to publish and distribute the audiotapes for all their Chinese language books because they cannot make money from them. When they published the CD-ROM, they had high hopes for it. In actuality, they found that multimedia products sell as poorly as audiovisual aids and have just canceled plans that have been in the works for quite a while to publish a CD-ROM for their successful beginning Chinese textbooks. Cheng & Tsui, on the other hand, is committed to publishing accompanying multimedia products of quality that our authors create, as we believe that these supplementary materials are essential tools for effective language acquisition. All this is to say that Cheng & Tsui is not a typical bottom-line only publisher. We believe in our mission; yet we must have prudent policies to enable us to continue carrying out our mission, especially since we have, to date, not had any foundation support to help produce our publications. In looking into the $1000 charge for digitizing to which you referred, I learned that the total for $982.85 covered up to 90 users on the web for six (6) books. More clearly, my staff could have divided each book's tapes charge separately as follows: IC 1/1 Textbook tapes (up to 90 users) $219.73 IC 1/1 Workbook 71.23 IC 1/2 Textbook 164.73 IC 1/2 Workbook 71.23 IC 2 Textbook 384.73 IC 2 Workbook 71.23 In comparison to the examples of other publishers' no duplicating and no discount and no digitization rules, our prices are extremely cheap and policies more accomodating. Separately, there are a few areas of misunderstanding in your letter that are too specific to your case that I do not wish to go into them here. I would like to address them with you on the phone after you have read this memo. I hope that by putting all this into a context, you will appreciate why we must charge for these materials, and that our fees are actually significantly lower than what most other publishers in our specialized world charge. Recently, before your e mail reached us, however, we were already reviewing our site license policies and wondering about the wisdom of our customized "third way." While we created it with the best of intentions, the "third way" has led to misunderstanding and creates a heavy administrative load for our staff. Although nearly every one who learned more about the background to our pricing rationale expressed support and understanding, we are now seriously thinking of adopting the no duplicating, no discounts, no digitization approach of our colleagues. I look forward to hearing from you soon to discuss areas that I have not covered in this letter. With hope for your understanding, Sincerely yours, Jill Cheng President Cheng & Tsui Company "Bringing Asia to the World" 25 West Street Boston, MA 02111-1213 USA Tel: 617-988-2401 Fax: 617-426-3669 www.cheng-tsui.com